Saturday, September 23, 2023

Unlike NPF, Price stabilisation fund remains a “virgin”

While most of the governments’ established special funds such as the controversial national petroleum fund run dry, its counterpart – the Price Stabilisation Fund has not been touched since its establishment.

The fund’s custodian is the Botswana Agricultural Marketing Board (BAMB) which was established by an Act of parliament of 1974. The same act further requires the Board to establish a Stabilization Fund through a Parliamentary appropriation ÔÇô primarily to stabilize food prices.

At the current moment the Fund sits at over P9 million and it remains solid.

Minister of Agriculture Patrick Ralotsia says, “Since it was established the Price Stabilisation Fund has never been used as the need to use it has never arisen.”

This cropping season, maize is priced at P2 100.00 from P2, 400 in 2016/17 cropping season, Millet P3 000.00 same as the prior season and Sorghum P2 550.00 from P2, 700 the previous year all per tonne.

The fund has not influenced this year’s grain purchase prices in any way.

The Fund does not rely on subventions and there are no other levies that remit into the fund, as it relies on money allocated by the government and the BAMB from time to time.

The 1974 BAMB Act had set the stabilisation fund maximum limit at P1 million. However Section 15, which deals with shortfalls, reasons that should there be insufficient moneys in the stabilisation fund to meet the whole of deficiency, “then, to the extent of the shortfall, (it can be met) from the development fund”.

Ralotsia explains that stabilisation Fund is not meant to set or increase prices, however, when prices are stable there is no need to make reference to the Fund. The important thing is whether a commodity fetches its value and anything below or above that is when they are not stable.

“And also the higher the prices are, the more the food becomes inaccessible or the more the food will only be accessed by the better-off (the rich) but our principle in Botswana is everybody must access food. We need to address the efficiencies of the way we do production as farmers so that a hectare produces maximally,” Minister Ralotsia advised.

Something that farmers may rejoice is that the government has since reduced a bag of beans from P700 to P400 not because the value of a 50 kilograms bag was P700 neither is it P400 where it is. Ralotsia’s submission is that this was a deliberate inflation of the price in order to encourage farmers to produce and further attract new farmers; and “we have reached overproduction of that commodity and looking for storage.”


Read this week's paper